What Are the NYC Employee Income Tax Rates?
Learn how New York City's personal income tax is calculated for residents, from determining your taxable income base to applying the correct tax bracket.
New York City’s personal income tax is a local tax applied to the income of certain individuals, estates, and trusts. This city-level tax is levied in addition to both federal and New York State income taxes. The tax is administered and collected by the New York State Department of Taxation and Finance on behalf of the city.
Determining Who Pays NYC Income Tax
Liability for the New York City personal income tax is determined by residency status. Individuals considered residents of NYC are subject to the tax on their worldwide income, regardless of where it is earned. An individual is defined as an NYC resident if they meet either the domicile test or the statutory resident test. The domicile test centers on the location of one’s permanent and primary home.
The statutory resident test applies to individuals who maintain a permanent place of abode in New York City and spend more than 183 days of the taxable year in the city. Non-residents who work in NYC are not subject to the city’s personal income tax, although their income earned in the city is subject to New York State income tax. An exception exists for certain non-resident city employees, who may be required to pay an amount equivalent to the city tax as a condition of employment.
Calculating NYC Taxable Income
The calculation of New York City taxable income begins with the Federal Adjusted Gross Income (AGI) from a filer’s federal tax return. This AGI is then modified by a series of additions and subtractions specific to New York State law. These modifications account for differences in how income and deductions are treated at the federal versus state level, resulting in the New York Adjusted Gross Income (NYAGI).
Common examples of New York additions include interest income from bonds issued by other states. New York subtractions can include pension and retirement income up to certain limits for eligible individuals, or interest income from U.S. government obligations.
After determining NYAGI, the next step is to subtract either the New York standard deduction or New York itemized deductions. The standard deduction is a fixed dollar amount that varies by filing status; for 2024, the standard deduction for a single individual is $8,000, while for married couples filing jointly it is $16,050. The resulting figure is the “New York taxable income.”
NYC Income Tax Rates and Brackets
The amount of New York City income tax owed is calculated using a progressive system with four tax brackets. The rate applied depends on the individual’s filing status and their New York taxable income. The rates are marginal, meaning higher rates apply only to the portion of income that falls within a specific bracket. For the 2024 tax year, the rates range from 3.078% to 3.876%.
For an individual with a “Single” filing status, the 2024 tax brackets are as follows:
- Income up to $12,000 is taxed at 3.078%.
- Income from $12,001 to $25,000 is taxed at 3.762%.
- Income from $25,001 to $50,000 is taxed at 3.819%.
- Taxable income over $50,000 is taxed at 3.876%.
The brackets for those who are “Married Filing Jointly” or a “Qualifying Widow(er)” are:
- Income up to $21,600 is taxed at 3.078%.
- Income from $21,601 to $45,000 is taxed at 3.762%.
- Income from $45,001 to $90,000 is taxed at 3.819%.
- Taxable income exceeding $90,000 is taxed at 3.876%.
Similar tiered brackets exist for the “Married Filing Separately” and “Head of Household” filing statuses.
To illustrate, consider a single filer with a New York taxable income of $60,000. The tax would be calculated in pieces: 3.078% on the first $12,000 ($369.36), plus 3.762% on the next $13,000 ($489.06), plus 3.819% on the next $25,000 ($954.75), and finally 3.876% on the final $10,000 ($387.60). The total NYC tax liability would be the sum of these amounts, which is $2,200.77.
Tax Withholding and Payments
For most employees who are NYC residents, the personal income tax is paid throughout the year via payroll withholding. Employers are required to withhold state and city income taxes from their employees’ wages. This process is managed through Form IT-2104, the Employee’s Withholding Allowance Certificate, which an employee uses to communicate their tax situation to their employer.
An employee completes Form IT-2104 to declare their filing status, number of withholding allowances, and NYC residency. The number of allowances claimed directly impacts the amount of tax withheld from each paycheck. Employees can obtain this form from their employer or download it from the New York State Department of Taxation and Finance website.
Employees should review their IT-2104 annually or whenever a significant life event occurs, such as a marriage, the birth of a child, or a substantial change in income. Failing to have the correct amount of tax withheld can lead to either a large refund or an unexpected tax bill at the end of the year.